Table 8-18
A very simple economy produces three goods: cameras,legal services,and books.The quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.
-Refer to Table 8-18.What is the GDP deflator in 2018 if 2018 is the base year?

Question

Table 8-18
  A very simple economy produces three goods: cameras,legal services,and books.The quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.
-Refer to Table 8-18.What is the GDP deflator in 2018 if 2018 is the base year?

Quizplus · Accepted Answer

To calculate GDP deflator in 2018, we need to use the formula: (Nominal GDP ÷ Real GDP) x 100. 
Using values from the table, Nominal GDP in 2018 = (50 x 25) + (100 x 200) + (200 x 20) = 12500 + 20000 + 4000 = 36500 
Real GDP in 2018 = (50 x 20) + (100 x 150) + (200 x 10) = 10000 + 15000 + 2000 = 27000 
Therefore, GDP deflator in 2018 = (36500 ÷ 27000) x 100 = 135.19 
However, the question asks for the value if 2018 is the base year. In a base year, GDP deflator is always 100. Hence, the answer is 100.

Table 8-18 a Very Simple Economy Produces Three Goods: Cameras,legal